This week is set to be pivotal for the financial markets as critical economic data rolls in, shaping expectations for the Federal Reserve’s future policy path. Since September, markets have significantly adjusted their rate cut expectations, now projecting fewer than two cuts for 2025. Strong economic data in the coming days could reinforce the view that the rate-cutting cycle may be nearing its end—or even hint at the possibility of rate hikes. The S&P 500 finished last week down 50 basis points, but a Friday rally helped offset further declines. Key technical levels, including the 50-day and 10-day moving averages, are acting as resistance points, making this a crucial moment for market movements.

Interest rates are also in focus, with the 10-year Treasury yield approaching significant resistance at 4.60%, a potential breakout level that could drive rates higher. This week’s economic calendar includes S&P Global PMI data on Monday, JOLTS and ISM Services on Tuesday, and the highly anticipated ADP employment report and nonfarm payrolls later in the week. Market sentiment is sensitive to any upside surprises in jobs data, wages, or unemployment rates, as these could challenge current expectations for rate cuts in 2025 and reignite fears of a return to tightening. Additionally, shifts in the yield curve and rising term premiums on longer-dated bonds reflect growing inflation and duration risk concerns.



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